TechNode Global
Vietnam’s tech ecosystem has witnessed significant growth in recent years, capturing the attention of global investors. In 2023 alone, the total investment in Vietnamese startups has amounted to $529 million.
As of 2024, Vietnam has eight unicorns, solidifying its position as one of the fastest-growing tech ecosystems in Southeast Asia. These unicorns include well-known names like VNG, MoMo, VNLife, Sky Mavis, Axie Infinity, VNPay, Tiki, and VNG Cloud. Some experts also lauded Vietnam as a rising star in the Southeast Asian tech landscape.
The country’s large population, rapid economic growth, and its stable government are the reasons why Singapore-based venture capital firm Quest Ventures sees it as a key market, the firm’s Vietnam-based senior analyst Linh Ha told TNGlobal in an interview.
“With 97.4 million people, 37 percent of whom live in urban areas, it offers a massive consumer base. Vietnam’s demographics are quite favorable; there’s a young and skilled workforce, which is a big asset for companies looking to expand,” she said.
Economically, it is one of the fastest-growing countries in the region, boasting an 8 percent GDP growth in 2022 and 5.05 percent in 2023, even with the global slowdown. Politically, Vietnam stands out as a stable environment for doing business, which gives investors and businesses confidence in long-term planning, she noted.
According to her, foreign direct investment has also increased, with over $27.7 billion pledged in 2022 alone, showing strong international confidence in its market.
“..these are the standout factors that make Vietnam so attractive for us as a regional VC,” she added.
When asked about which are the high-growth sectors in Vietnam, Ha said e-commerce remains a major driver, with the sector projected to grow at a 29 percent annual rate, making it one of the fastest in the region.
“Some other high-potential sectors we’ve seen in the country are Smart Manufacturing, Cross-Border E-commerce, AI, and SaaS Solutions,” she noted. “The government also has a strategic emphasis on the Green Economy for Vietnam’s future development, aligning with global trends of digital transformation and automation.”
Despite the progress, Ha also said it is fair to say that the tech ecosystem in Vietnam remains “somewhat domestically focused”.
“This is partly due to early-stage startups prioritizing local market penetration first before going regional or global, given the country’s fast-growing digital consumption,” she said.
“Vietnam’s digital economy is expected to contribute 20 percent of GDP by 2025 and has been the fastest-growing in Southeast Asia. This suggests that while the base remains local, there is substantial potential and intent to expand regionally. The landscape is evolving, and we are hopeful to see more Vietnamese startups to venture beyond borders in the coming years,” she added.
In the interview, Ha shared the strengths and weaknesses she observed in the tech ecosystem and gave suggestions to all stakeholders on how the ecosystem can be improved. She also shared how Quest Ventures identifies and supports emerging tech talent in Vietnam, among others.
Below are the edited excerpts:
How do you see the current state of Vietnam’s tech ecosystem? Some observers opined that it is still quite closed, the tech startups in the country still operate more within the country and not really expanding regionally. What’s your thoughts on this?
Vietnam has witnessed major progress in their tech ecosystem in recent years. The total investment in Vietnamese startups for 2023 amounted to $529 million.
As of 2024, Vietnam has eight unicorns, making it one of the fastest-growing tech ecosystems in Southeast Asia. These unicorns include well-known names like VNG, MoMo, VNLife, Sky Mavis, Axie Infinity, VNPay, Tiki, and VNG Cloud.
Despite some signs of success, it is fair to say that the ecosystem remains somewhat domestically-focused. This is partly due to early-stage startups prioritizing local market penetration first before going regional or global, given the country’s fast-growing digital consumption.
Vietnam’s digital economy is expected to contribute 20 percent of GDP by 2025 and has been the fastest-growing in Southeast Asia. This suggests that while the base remains local, there is substantial potential and intent to expand regionally. The landscape is evolving, and we are hopeful to see more Vietnamese startups to venture beyond borders in the coming years.
From a VC’s perspective, where are the opportunities you see in Vietnam? Are there any hot sectors? Is there any sector(s) that should see more disruption or innovation?
For Quest Ventures, we consider Vietnam a key market for several reasons. Three main ones are: its large population, rapid economic growth, and its stable government.
With 97.4 million people, 37 percent of whom live in urban areas, it offers a massive consumer base. Plus, Vietnam’s demographics are quite favorable; there’s a young and skilled workforce, which is a big asset for companies looking to expand.
Economically, it is one of the fastest-growing countries in the region, boasting an 8 percent GDP growth in 2022 and 5.05 percent in 2023, even with the global slowdown. Politically, Vietnam stands out as a stable environment for doing business, which gives investors and businesses confidence in long-term planning.
Foreign direct investment has also increased, with over $27.7 billion pledged in 2022 alone, showing strong international confidence in its market. Of course, there is much more to consider, but these are the standout factors that make Vietnam so attractive for us as a regional VC.
As for high-growth sectors, e-commerce remains a major driver, with the sector projected to grow at a 29 percent annual rate, making it one of the fastest in the region.
Other high-potential sectors are Smart Manufacturing, Cross-Border E-commerce, AI, and SaaS Solutions. The government also has a strategic emphasis on the Green Economy for Vietnam’s future development, aligning with global trends of digital transformation and automation.
Is there any particular sector(s) Quest Ventures focuses on? and why?
We are an industry-agnostic venture capital firm. We keep an eye on emerging trends and position ourselves to be the first to back the most promising startups in sectors that are poised for growth.
How can Vietnam’s tech ecosystem be more vibrant? Based on your observations, what are the strengths the ecosystem has? and what are the areas that need to be improved?
Beyond the macro factors driving the strength of Vietnam’s tech ecosystem that I mentioned above, a significant advantage lies in the strong commitment and strategic support from the government to foster its development.
The Vietnamese government has been ramping up support for startups, aiming to transform the country into a leading tech and innovation hub in Southeast Asia.
One major initiative is “Project 844”, also known as the National Program to Support the Innovative Startup Ecosystem, which was launched in 2016. With a budget of over $88 million allocated until 2025, this program aims to create a robust legal framework, promote local innovation, and attract global investment by offering both financial and non-financial support.
Furthermore, various local and national startup competitions are organized annually, such as the Techfest Vietnam and the Startup Vietnam Foundation initiatives, which not only provide prize funding but also connect startups with investors, accelerators, and global networks.
Cities such as Ho Chi Minh City, Hanoi, and Da Nang have their own dedicated innovation programs. For example, in Hanoi, the Vietnam Innovation Challenge (VIC) is a flagship initiative organized by the Ministry of Planning and Investment and the National Innovation Center (NIC).
The challenge seeks to identify and support breakthrough solutions in key sectors such as semiconductors and artificial intelligence, positioning Hanoi as a leader in advanced technology innovation. The program aims to cultivate 500 pioneering enterprises by 2030 and establish Vietnam as a global destination for tech and innovation investments.
The NIC also collaborates closely with public and private stakeholders to build a comprehensive innovation ecosystem in Hanoi. In Da Nang, Da Nang’s Resolution No. 328 allocates funds to establish the city as a national innovation center by 2025, while also setting up tech parks and incubators that offer specialized support for high-tech startups.
These strong foundations notwithstanding, a major challenge for startups raising funds in Vietnam is the lack of clarity in regulations, as the country lacks a clear legal framework for setting up venture capital funds or facilitating capital flow.
This regulatory uncertainty often drives local startups to register in Singapore, where the legal environment is more transparent and investor-friendly.
By establishing entities abroad, these startups can streamline the fundraising process and access a broader pool of global investors, significantly enhancing their ability to secure capital.
Any suggestions for startups/entrepreneurs, local and foreign investors, corporations and government?
Doing business in any country requires connections, but in Vietnam, it is crucial to have the right people on your side. Let’s think of it as having a local guide who can help you navigate the complexities of the market and fast-track opportunities. I cannot emphasize enough the value of finding a “super-connector” or a trusted local partner – someone who knows the ins and outs of the ecosystem and has relationships that can help open doors you would not have even known existed.
Equally important is understanding how to work with the government. Vietnam’s regulatory environment can be tricky to navigate if you do not have the right insights. Having someone on your team who understands local dynamics, who speaks the language (literally and figuratively), and knows how to engage with government officials can make all the difference.
For startups looking to expand into Vietnam, our advice is to prioritize understanding your target market at a deeper level. Don’t just translate your content – really invest in learning about the local culture, consumer behaviors, and unique pain points then tailor your product or service to meet these specific needs!
This will help you build trust with local customers and differentiate your offerings. Hyper-localization is key to standing out and thriving.
We conduct much of this understanding through our Vietnam Global Innovation program, a partnership with Enterprise Singapore and Economic Development Board of Singapore to help Singapore startups access the Vietnamese market.
How does Quest Ventures identify and support emerging tech talent in Vietnam?
We take a holistic approach to ecosystem building by collaborating closely with five key pillars: government, corporates, higher education institutions, risk capital providers, and startups. Our involvement spans across supporting entrepreneurship hubs and engaging with student initiatives nationwide.
One of our non-profit arms, Social Impact Catalyst, is dedicated to championing social impact initiatives across ASEAN, nurturing socially driven projects and building a pipeline of young leaders committed to creating positive change in their local communities. We have a flagship chapter based at Fulbright University that plays a crucial role in fostering these initiatives.
Among our core programs is the Venture Capital Accelerated program, a fast-track course designed to equip aspiring entrepreneurs and investors with a solid foundation in venture capital.
We collaborate with local partners to offer this training to a diverse range of stakeholders, including students, entrepreneurs, aspiring investors, and senior corporate executives. Past partnerships have included leading universities such as FPT University, and the Department of Science and Technology in Ho Chi Minh City. More than 500 participants worldwide have been trained to-date.
What are the main challenges you’ve encountered when working with Vietnamese startups, and how do you overcome them?
The two main startup and innovation hubs are Ho Chi Minh City and Hanoi while Da Nang, the third largest city in the country, is catching up. For this reason, we have established partnerships with local governments, universities, and entrepreneurship hubs in emerging centers such as Da Nang to help bridge the gap between these regions.
We are also seeing an exciting new wave of founders returning to Vietnam equipped with international education and experience, bringing fresh perspectives and innovative approaches to the local market.
However, there remains a gap when it comes to strategic and business leadership, specifically leaders who do not only think big but also have the skills and vision to scale startups from 1 to 100.
While many founders are capable of getting their ventures from 0 to 1, there is still a shortage of seasoned talent who can effectively navigate complex growth stages and build companies that compete on a regional or global scale. Our educational programs and ecosystem building activities help address these issues, laying bricks to build up the next generations of talent in Vietnam.
How is the deployment of Quest Ventures’ earlier funds?
We have invested in more than 100 companies with footprints in more than 150 cities across Southeast Asia and Central Asia. Our funds such as the Super Angel Fund have outperformed funds of similar vintage.